The rules related to minimum public share holding exist from 2001 but there is no significant change in the ownership structure of promoters in last 11 years in India. A good policy should be determined by the benefits it provides after implementation and not at the time of announcement itself. The objective of the paper is to establish a link between ownership structure and quarterly changes in ownership structure, to the relative informational efficiency of transaction prices, an important dimension of market quality and how it affects the informational efficiency of stock prices of the listed companies, in India. The results suggest that stocks with greater institutional ownership are priced more efficiently as their transaction prices closely follow a random walk. Institutional investors enhance the informational efficiency of their stocks by increased analyst coverage, and institutional trading activity. Efficiency improves following exogenous shocks in institutional ownership. The study reports that high promoter holding augur information asymmetry and creates moral hazard and adverse selection for the outside investors. There should be a mechanism to attract the interest of institutional investors especially FIIs in the Indian companies so that they not only purchase the share divested but also help in efficient price discovery